1 Cournot Suppose that the inverse market demand function is given by P 100 - Q. where Q is the total output. There are two firms in the industry. Each firm has a total cost function given by C competing in quantities. Calculate the profit maximizing price and quantity for both firms. = 104., where i = 1,2. They are

1 Cournot Suppose that the inverse market demand function is given by P 100 - Q. where Q is the total output. There are two firms in the industry. Each firm has a total cost function given by C competing in quantities. Calculate the profit maximizing price and quantity for both firms. = 104., where i = 1,2. They are

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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8. Two firms competing a la Hotelling with fixed locations and symmetric constant marginal costs. Suppose there is a line between 0 and 1 in which two rms locate themselves, firm 0 being at point xo = 0 and firm 1 being at point x1 = 1. Each firm has a linear cost function C (q.) = cq.where q.represents output level of firm/product i = 0,1, parameter is such that c > 0. Consumers are located between 0 and 1 and are distributed uniformly according the the graph %3D below. 1 Вyyx from 0 Buy from 1 x* 1 Consumers value the product firm i = 0,1 in r¡ > 0 and incur a disutility from travelling to the location of the product which is assume to be a linear function of distance. The mass of consumers is normalized to 1 since that is the area in the graph. Indirect utility function for consumers is then V (rip;x) = ri -t|Xj. X|- p; where p; denotes the price of product/ firm i = 0,1 and x is the consumer (point) that is located in the line between 0 and 1. Each consumer wants at most one unit…
Part C D
Due to an increase in the price of a competitor's product, the demand for a firm's product increases sharply. How is this most likely to affect the firm's marginal revenue and marginal cost? OA. Both marginal revenue and marginal cost will increase. OB. Marginal revenue will increase but marginal cost will decrease. OC. Marginal revenue will increase but marginal cost will not change. OD. Both marginal revenue and marginal cost will not be affected. OE Marginal revenue will not change but marginal cost will increase.
Now suppose there are 100 firms in this industry, all with identical cost schedules. Fill inthe market quantity supplied at each price in the market.
. In competitive markets, there are many small firms with each firm unable to influence the market price. Suppose company ABX operates in the wheat market. The company produces and markets wheats at a Price = $20 per container. The firm’s total costs are given as: TC = 50 +2Q + 3Q2 What price should the firm charge? Why?
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Oscar is one of many farmers growing soybeans in the upper Midwest under purely competitive market conditions. The demand curve for Oscar's soybeans O lies above his marginal revenue curve. O is downward sloping O is perfectly inelastic O coincides with Oscar's marginal revenue curve. 21 P Gtv MacBook Pro F8 F9 吕0 S0 F3 F6 F7 F4 F5 * %23
Use the figure below to answer the following question. Total revenue and total cost (dollars) 400 300 Z 200 100 Q 0 99 Quantity Figure 12.2.1 Refer to Figure 12.2.1, which shows a perfectly competitive firm's total revenue and total cost curves. Which one of the following statements is false? A) At an output of Q1 units a day, the firm makes zero economic profit. B) At an output less than Q1 units a day, the firm incurs an economic loss. OC) At an output of Q2 units a day, the firm incurs an economic loss. D) Economic profit is the vertical distance between the total revenue curve and the total cost curve. E) At an output greater than Q3 units a day, the firm incurs an economic loss. Main Content
Suppose a perfectly competitive industry can produce a product with total cost TC = 30 and the market demand for the product is given by Q = 120- Suppose that the same market can be served by a monopolist operates with the same cost and demand functions. How does the consumer surplus change due to monopoly relative to perfect competition? O It falls by 3600 It does not change OIt falls by 6000 It falls by 4800
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